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COLUMBIA, S.C. (AP) — It turns out that $1.8 billion in South Carolina state funds weren’t just sitting in a bank account waiting to be spent. Instead, it was an accounting error compounded over years instead of being reconciled, an independent forensic audit determined.

The announcement Wednesday dashed ideas like returning the money to taxpayers or using the windfall on roads. But it also led to more questions: why wasn’t the error reported when it was first discovered back around 2018, and should the elected state treasurer, Curtis Loftis, step down or be impeached.

“In the private sector, if anybody had made a blunder of $1.8 billion — whether it was an error, negligence, misfeasance, malfeasance, fraud or a cover-up, they would lose their job,” said Republican state Sen. Larry Grooms, who leads a committee investigating the accounting problems.

The private audit, which cost millions of dollars, is the most comprehensive look so far into the South Carolina Treasurer and Comptroller General’s Office. Those agencies are typically led by elected officials and are in charge of making sure that government accounts stay balanced.

The audit isn’t the final word on the matter. Investigators, including the Securities and Exchange Commission, are trying to determine if it was just a series of mistakes or whether state employees figured out what was going on and tried to cover it up, Grooms said.

Depending on how serious the allegations are, the state could see its rates to borrow money rise, pay fines or face other punishment.

In a separate case, the elected Republican comptroller general — the state’s top accountant — resigned in 2023 after his agency started double-posting the amount the state had sent to colleges and universities for a decade, leading to a different $3.5 billion error that also was all on paper.

While Richard Eckstrom stepped aside in that case, Loftis has defended himself and his office.

The problems with the $1.8 billion error started as the state changed computer systems in the 2010s. Grooms said the initial mistake happened when Loftis, whose job is to write checks for the state, shifted accounts from the old system to the new one.

Loftis testified under oath before senators last year that he invested the money in the mystery $1.8 billion account and made nearly $200 million in interest for the state, which Grooms said seems impossible since there was no money there. The senator said Loftis also appears to have lied under oath when he said their was no federal investigation into his office.

Loftis issued a statement Wednesday thanking the audit firm Alix Partners for its work. He did not address the statements from Grooms.

“The citizens of South Carolina can be confident that their money is safe,” Loftis said. “We, along with our state partners, look forward to reviewing the report in its entirety.”

Gov. Henry McMaster said he has confidence in everyone going forward to handle the state’s accounts and doesn’t think there was any intention to deceive anyone.

“It was an accounting error with no criminal conduct, no wrongful intent, no intent to make the error — errors sometimes happen and unfortunately, that was a big one,” McMaster told reporters.

Among other recommendations, the audit said South Carolina should hire a third-party auditor to look over the shoulders of the Treasurer and Comptroller General offices to make sure the state’s accounting books are properly kept.

The state has its own auditor, but that person is hired by a five-person board that includes both the treasurer and comptroller general. Lawmakers are likely to look into why that person didn’t raise the alarm about the accounting problems sooner, Grooms said.

Meetings have already been scheduled with a House subcommittee, and the Senate Finance Committee will likely call Loftis to testify by the end of the month, Grooms said.

South Carolina has had a long history of accounting issues.

The Treasurer’s Office was created when the state’s first constitution was written in 1776. Back then, the General Assembly selected the treasurer. But by the early 1800s, the state’s finances were in “a state of bewildering confusion” and no one could “tell the amounts of debts or of the credit of the State,” according to History of South Carolina, a book edited in 1920 by Yates Snowden and Howard Cutler.

The first comptroller general determined the state was owed about $750,000 in debts, which would be worth about $20 million today.

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WASHINGTON (Reuters) – A Toyota Motor Corp unit agreed to plead guilty and pay over $1.6 billion in a settlement with U.S. government agencies to settle violations related to an emissions fraud scheme, the U.S. Justice Department said in a statement on Wednesday.

The Justice Department, FBI and Environmental Protection Agency, among other bodies, reached criminal and multiple civil resolutions with Toyota subsidiary Hino Motors, the Justice Department said.

(Reporting by Kanishka Singh in Washington; Editing by Sandra Maler)

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BEIJING (Reuters) – Apple smartphone shipments in China fell 25% in the fourth quarter, while Huawei’s rose 24%, data from research firm Canalys showed on Thursday.

Apple shipped 13.1 million units versus Huawei’s 12.9 million, the data showed. That give Apple a share of 17% and number one position, followed closely by Huawei.

Total fourth quarter smartphone shipments from China increased 5% year-over-year to 77.4 million units.

Annual shipments of smartphones in China in 2024 increased 4% year-over-year to 285 million units.

(Reporting by Liam Mo and Brenda Goh; Editing by Kim Coghill)

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ANKARA, Turkey (AP) — Turkish Airlines will resume its flights to Damascus, Syria, next week after a halt of more than a decade, officials said Wednesday following a visit by a delegation of Syria’s new, Turkey-backed rulers.

The CEO of Turkey’s national carrier, Bilal Eksi, said there would be three flights a week, starting on Jan. 23. “We are returning to Damascus,” Eksi said in a post on the social media platform X.

His announcement followed a visit earlier in the day by Syria’s new foreign minister, Asaad al-Shibani, who held talks with Turkey’s President Recep Tayyip Erdogan and other top officials In the Turkish capital, Ankara.

Al-Shibani is part of Syria’s new, de facto authorities under Hayat Tahrir al-Sham, or HTS, an Islamist group behind the lightning insurgency that ousted President Bashar Assad in December and ended his family’s decades-long rule. From 2011 until Assad’s downfall, Syria’s uprising and civil war killed an estimated 500,000 people.

The new rulers in Syria are eager to establish diplomatic ties with regional and global governments.

Speaking alongside al-Shibani at a news conference, Turkey’s Foreign Minister Hakan Fidan alluded to plans to reopen Turkey’s Consulate in the Syrian city of Aleppo. Turkey already announced last month it would reopen its embassy in Damascus after a 12-year closure.

Fidan urged for the lifting international sanctions on Syria to support basic public services and facilitate reconstruction of the war-shattered country.

“If sanctions are lifted, the country’s normalization process will accelerate, and conditions will be created that will enable millions of Syrians to return to their country,” Fidan said.

“We came to establish a new country, to rebuild it,” al-Shibani said. “We will work with all our might to ensure that it will be a country that has the rights of all its people and is integrated with the region and the world.”

He also pledged that Syria’s new rulers would safeguard the “territorial unity of Syria” and prevent any threat to Turkey from Kurdish groups in Syria, including the YPG or the People’s Protection Units, and the Kurdish-led Syrian Democratic Forces, which have U.S. backing.

Ankara claims the Syrian Kurdish groups are allied against Turkey with Kurdistan Worker’s Party, or PKK, which has waged an armed insurgency against Turkey since 1984. The conflict has spread beyond Turkey’s borders into Iraq and Syria, and has killed tens of thousands of people.

The PKK is considered a terrorist group by Turkey, the United States and the European Union.

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By Lewis Krauskopf and Suzanne McGee

NEW YORK (Reuters) – Donald Trump’s inauguration on Monday could herald a more volatile period for markets, with the Republican seen moving quickly on a wide swath of issues including trade and immigration that are expected to swing asset prices.

Trump’s tariff plans could further fan inflation fears that pressures bond and stock prices, while efforts to tighten immigration controls could also reverberate through those markets. Moves to ease regulation are poised to lift assets, including crypto and bank stocks. 

“The markets will be very sensitive to this speech,” said Jeff Muhlenkamp, a portfolio manager at investment management firm Muhlenkamp & Co. “Everyone right now is trying to parse every word and nuance that comes from Trump or his biggest allies.”

Some prices already incorporate Trump’s expected policy aims, among them tax cuts, reduced regulations and tariffs on foreign imports. The address could also lay the groundwork for White House actions in the coming days and weeks.

“Financial markets are primed to move on any indication that the new administration might pursue a different course than it has telegraphed up until now,” said Doug Peta, chief U.S. strategist at BCA Research.    

In general, stocks have had a tepid reaction to presidential inauguration, although this time could be different given Trump’s potential to be unpredictable and ability to shake markets with his commentary, investors said.

With inaugurations since World War II, the S&P 500 has posted an average decline of 0.27%, with the index rising or falling on about half the occasions on the day of the speeches themselves or on the first day of trading following instances markets were closed, according to LSEG data.

Following Trump’s last inaugural address, in January 2017, the S&P 500 ended up 0.3% on the day. The U.S. stock and bond markets are closed on Monday, which is also the Martin Luther King holiday, so much of the trading reaction may not be evident until Tuesday.

During the entirety of Trump’s first term, the S&P 500 rose nearly 68%, but markets saw bouts of volatility, stemming in part from a trade war Trump fought with China.

STEAM BEHIND TRUMP TRADE?  

Of course, investors for months have been shifting portfolios based on the impending change in the White House, with many so-called “Trump trades” gaining steam even ahead of the November election when he was leading in polls and betting markets.

For example, shares of Tesla, which is led by Trump backer Elon Musk, have soared 60% since the Nov 5 election. Other gainers include bitcoin, which has jumped over 30% since Trump’s win amid optimism for a friendlier regulatory environment, and private prison stocks Geo Group and CoreCivic, which have climbed about 100% and 60%, respectively, as investors anticipate an immigration crackdown could increase need for detention centers.

“The markets are trying to start to price in policy before the policy has come into vision in any clear way,” said Tony Roth, chief investment officer at Wilmington Trust. 

Some “Trump trades,” however, have faded. Those include shares of regional banks and small-cap companies, which are both expected to benefit from a de-regulation push under Trump, and have given up at least some of their post-election gains. 

The broader stock market has also lost steam. Optimism over Trump’s expected pro-growth agenda including reduced taxes and regulations broadly benefited equities following the election.

But the S&P 500 has pulled back and is now up about 1% since Nov 5. Persistent inflation is leading markets to predict the Federal Reserve will end its interest rate cutting cycle sooner than previously hoped, undercutting the stock market’s momentum.  

WARY OF TARIFF TALK

Investors are wary of specific topics causing ruptures.  

David Bianco, Americas chief investment officer at DWS Group, will be listening for any hints about tariff introductions in the inauguration speech, adding that “Trump has got the ability to take action on tariffs and he probably does very quickly” and that such comments could “sour the mood for investors.” 

In particular, Bianco said, “the bond market should be on guard” for Trump’s comments. Benchmark Treasury yields, which rise when bond prices fall, on Friday hit their highest levels since November 2023 after a blowout U.S. jobs report fueled more inflation anxiety.

Investors are mindful Trump may voice some unusual ideas, along the lines of his recently expressed desire to annex Greenland, or tout goals that suggest major spending, which could exacerbate concerns about the expanding fiscal deficit. 

Jay Woods, chief global strategist at Freedom Capital Markets, said he is watching which business leaders might be attending the inauguration events.

“That could speak a little more to the individual companies that are looking to get an inside track with the White House,” Woods said.

Alex Morris, president and chief investment officer of F/m Investments, said he will be listening for Trump’s tone, including “every sentence that focuses on his anger rather than policy or platitudes.”

“The longer that anger continues,” Morris said, “the more likely it is that bonds get cheaper, equities get cheaper.”

(Reporting by Lewis Krauskopf and Suzanne McGee, additional reporting by Laura Matthews; editing by Megan Davies and Anna Driver)

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MOSCOW (Reuters) – Nearly 500,000 metric tons of Russian oil products are trapped on tankers hit by U.S. sanctions, LSEG data showed on Wednesday.

On Jan. 10, new Russia-related sanctions targeted more than 180 vessels and insurance companies, adding to the impact of similar restrictions imposed by United Kingdom and Europe Union.

The vessels under the latest U.S. sanctions include nine tankers that loaded oil products at Russian Baltic and Black Sea ports in December and January.

Four of them – Cup, Aquatica, Turaco and Onyx – are carrying in total around 280,000 tons of fuel oil, destined for India, Turkey and Singapore, LSEG data shows.

Another of the tankers – Ariadne – was loaded in December with about 35,000 tons of naphtha in the Russian Baltic port of Ust-Luga. It is drifting near Egyptian port of Port Said, according to shipping data.

Four other vessels from the sanctions list are carrying in total around 160,000 tons of ultra-low sulphur diesel and gasoil of Russian origin.

One of those cargoes – Pravasi – is discharging at the Brazilian port of Santos. Three other vessels – Symphony, Jupiter and Talisman – are on their way to Turkey, according to LSEG data.

Although there is a transition period, allowing the discharge of cargoes that has already been agreed, traders said concern about penalties has slowed activity.

Since the sanctions were announced, at least 65 oil tankers have dropped anchor at multiple locations, including off the coasts of China and Russia, ship tracking data showed.

(Reporting by Reuters. Editing by Barbara Lewis)

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(Reuters) – Wells Fargo’s profit climbed in the fourth quarter, buoyed by stronger investment banking earnings.

The fourth-largest U.S. lender’s net income rose to $5.08 billion, or $1.43 per share, it said on Wednesday. That compares with $3.45 billion, or 86 cents per share, a year earlier.

Wall Street was bolstered by a rebound in activity last year. Increasing confidence spurred companies to issue equity and debt. Corporations also struck deals, lifting volumes from a decade low in 2023.

Bankers expect 2025 to be a much busier year for deals, buoyed by hopes of lower corporate taxes, easing regulations and a broadly pro-business stance under President-elect Donald Trump.

Wells Fargo’s investment banking fees jumped 59% to $725 million in the quarter compared with a year earlier.

The bank also benefited from easier comparisons with the year earlier, when it took sizeable charges related to severance costs and a special assessment fee it had to pay to refill a government deposit insurance fund.

(Reporting by Arasu Kannagi Basil in Bengaluru and Nivedita Balu in Toronto; Editing by Lananh Nguyen and Shounak Dasgupta)

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Shell got one. So did the pipeline company Enbridge. And last summer, energy giant Drax got its biggest one to date, worth more than half a billion dollars.

These weren’t just any loans to massive corporations. They were made by some of the world’s largest banks at discounted rates, in exchange for commitments by each of these mega-polluting companies to improve their environmental practices.

That may sound like a typical “green” loan. But these “sustainability-linked loans,” or SLLs, require little of the same accountability. Companies don’t have to spend the money toward their sustainability targets, and neither they nor the banks have to disclose interest rates, benchmarks for success or the penalties for falling short.

In the last several years, banks gave out more than $286 billion in these SLLs to hundreds of companies in environmentally damaging industries, including fossil fuels, mining and companies linked to significant deforestation, an investigation by The Examination, Toronto Star and Mississippi Today has found. That’s nearly 1 in 5 dollars out of all SLLs, the team’s analysis of data from the London Stock Exchange Group from 2018 to 2023 showed.

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This investigation was reported in partnership with The Examination, Mississippi Today and Toronto Star. Reporting was supported by the Pulitzer Center’s Rainforest Investigations Network.

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As climate change becomes more severe, with carbon emissions and global temperatures surging to record highs last year, pressure is on the biggest polluters to clean up their processes. But instead, these loans are often used to help companies and banks improve their reputation without actually reducing environmental harms.

In some cases, the loans have financed companies that were actively expanding polluting operations, the investigation found.

“They do not lead to measurable change,” said Richard Brooks, climate finance director for the environmental nonprofit Stand.Earth. “And they’re really meant to greenwash your finances mostly for expansion activities.”

Shortly after receiving an SLL, Canada-based Enbridge expanded a pipeline carrying tar sands oil from Alberta to the United States, a project estimated to increase carbon emissions by the equivalent of 50 new coal-fired power plants.

U.K.-based Drax has gotten a series of SLLs linked to producing cleaner energy as it shifts from burning fossil fuels to burning wood pellets — even though researchers say such a switch is worse for the climate. Drax is making plans to expand its wood biomass operations across the U.S.

Companies receiving these loans often sent out press releases trumpeting sweeping sustainability plans and broad goals but seldom made clear which, if any, targets were binding, the investigation found.

Many that set goals for reducing carbon pollution used “intensity” of emissions rather than overall emissions. Intensity measures efficiency per unit rather than total emissions. For example, a company might highlight that it has reduced methane emissions per head of cattle while failing to note it has increased the size of the herd.

In several cases, the companies’ own documents showed that their overall emissions increased substantially even as they received SLLs linked to decarbonization.

Banks get several benefits from issuing SLLs: They lock in massive multiyear deals with major corporations and typically count these loans toward their own public targets for sustainable lending.

Proponents of these loans say they serve an important purpose. Since they are not tied to a specific green project, they allow a more diverse set of companies to use financial incentives to improve their environmental practices. This in turn produces impact at a larger scale, they say.

“In my experience the people who are structuring these loans are endeavoring to do so in a responsible manner,” said Tess Virmani, head of policy for the lending industry group Loan Syndications and Trading Association. “I don’t think that there is as much of a greenwashing risk as there is the perception of one.”

None of the banks or companies in this story would disclose specific benchmarks or financial details of their loans, many citing issues of confidentiality. Royal Bank of Canada, one of the lenders that financed the loans to Enbridge and Drax, said it follows industry practices and is vested in helping the environment.

“Royal Bank of Canada is proud to have worked with our clients in recent years to deliver innovative financial solutions including sustainable finance,” the bank said in a statement, adding that its criteria for this financing were in “alignment with widely accepted global and Canadian industry standards.”

Drax Group, which reported more than $10 billion in revenue in 2023, brands itself as a leader in renewable energy. It received its first SLL in 2020 for $369 million, financed by more than a dozen banks including JPMorgan Chase, Barclays and Bank of America.

The loan was linked to reducing Drax’s “carbon intensity” — rather than total emissions — and its specific terms were not detailed in public documents.

In the same year, Drax was running into trouble with environmental regulators over its wood pellet plant in Gloster, a small town in rural Mississippi. State regulators fined the facility $2.5 million, one of the highest Clean Air Act penalties in Mississippi’s history, for the release of toxic chemicals called volatile organic compounds.

In July 2021, Drax finalized another SLL for $208 million backed by lenders including the Royal Bank of Canada. It took out the loan to finance its debt from acquiring Canadian pellet producer Pinnacle Renewable Energy, a deal that doubled down on its wood biomass strategy. Like its earlier loan, this one also was linked to reducing its carbon intensity.

Drax is one of dozens of companies in the wood biomass industry — which burns wood and wood waste products to produce energy — that have taken advantage of SLLs.

The Examination and Mississippi Today found that 40 companies that operate wood biomass facilities obtained more than $76 billion in SLLs between 2018 and 2023. The analysis was based on loan information from the London Stock Exchange Group and data on wood biomass facilities from the Environmental Paper Network, a global coalition of civil society organizations.

Wood biomass companies have flourished in the last decade, presenting their work as an eco-friendly alternative to fossil fuel. U.S. exports of wood pellets reached nearly 10 million metric tons in 2023, according to the U.S. Industrial Pellet Association. More than 80% of American pellets are made in the U.S. South and shipped to nations that have made some of the biggest climate promises in the world.

The industry makes the case that the forests they harvest for energy will eventually grow back and cancel out the emissions caused by burning wood, allowing them to claim massive climate benefits when replacing oil or coal.

The United Kingdom and European Union have embraced this logic, classifying wood bioenergy as renewable and carbon neutral and relying on it to meet national climate goals.

How is this possible? They don’t count emissions from burning wood.

This carbon accounting escape clause — endorsed by the United Nations Framework Convention on Climate Change — has allowed the U.K. and Europe to claim emissions cuts based on production of wood pellets at factories that pollute in America.

The U.S. has no such subsidies for wood bioenergy, but the industry is lobbying for their provision under the Inflation Reduction Act.

Most climate scientists reject the central claim that underlies this carbon accounting loophole: that trees can grow fast enough to offset emissions from burning them.

In 2021, more than 500 scientists wrote an open letter to President Joe Biden and other world leaders urging them to repudiate the “false solution” of wood biomass in climate policies and warning that “this burning of wood will increase warming for decades to centuries.”

John Sterman, a professor at the Massachusetts Institute of Technology, said Drax’s sustainability-linked loans incentivize activities that end up being more damaging to the environment. In 2018, he conducted a study that found that energy from wood biomass is more carbon-intensive than burning coal.

“Wood bioenergy is harmful and it actually makes climate change worse,” Sterman, an expert on corporate environmental practices, told The Examination. “It’s actively moving us in the wrong direction.”

Emissions intensity also does not pass muster as a way to measure climate progress, Sterman said, calling it “meaningless” to set a target that does not limit emissions overall.

“The atmosphere responds to total emissions,” he said.

Drax said the scenarios in Sterman’s study do not reflect its forestry practices.

“We strongly believe that a transition to modern bioenergy, in which biomass is sourced sustainably, is an important part of delivering a net zero world,” the company said in an emailed response to questions.

The company said in its 2023 annual report that its overall emissions were down and that it had already achieved some of its key sustainability goals, including an 89% reduction in emission intensity in its operations since 2020. Drax told The Examination that these gains were in large part due to replacing coal with “sustainably sourced biomass.”

The company didn’t credit the escape clause that allows it to ignore massive emissions from burning wood.

In August 2024, Drax accepted its largest SLL to date, renewing its 2020 loan in a deal that expanded its credit line from $369 million to $553 million.

The company announced the following month that it was considering expanding U.S. operations, investing up to $12.5 billion to build more biomass plants across the country in the next decade.

Barclays said in a statement that its criteria for sustainability-linked finance was “consistent with industry practice” and that it couldn’t comment on individual SLLs for reasons of confidentiality. The Royal Bank of Canada said the same.

JPMorgan declined to comment, and Bank of America did not respond to repeated email and telephone inquiries.

People living near these wood pellet facilities say they have more imminent concerns than climate change.

More than half a dozen Gloster residents recently told The Examination that since the Drax plant opened in 2016, they’ve noticed a bad smell coming from the factory — comparing it to rotten eggs — and that they have developed shortness of breath or asthma.

Carmella Causey, 62, said she thinks the emissions from Drax have exacerbated her health issues. She said she now needs supplemental oxygen just to make her bed.

“It’s hard to breathe,” Causey said. “I don’t know what’s going on, but there’s something in this air.”

Last September, Drax settled with Mississippi regulators for another set of alleged violations in Gloster, this time for emissions of a group of toxic chemicals called hazardous air pollutants, which the U.S. Environmental Protection Agency defines as “those known to cause cancer and other serious health impacts.” Without admitting wrongdoing, the company agreed to pay a $225,000 fine, of which $75,000 will be dedicated to installing a dust suppression screen at the plant.

Krystal Martin, a community leader in Gloster who has spearheaded opposition to Drax, said the screen is a decade too late.

“Dust is already in our lungs. It’s already in our bloodstream,” Martin said.

Researchers at Brown University have announced a $5.8 million grant from the National Institute of Environmental Health Sciences to study what is making people in Gloster sick and whether pollution from Drax’s facility is responsible.

Drax said it commissioned an air quality analysis by an environmental consulting firm in 2023 that found “no adverse impacts to human health,” adding that it is committed to high standards of environmental and safety compliance. “Drax has partnered with state regulators to establish environmental best practices,” the company said. It did not provide its air quality analysis to The Examination.

Jointly created by banks and companies in 2017, sustainability-linked loans face little oversight. The contracts are private. The closest to a formal standard is a set of voluntary principles for SLLs developed by loan industry groups, which call for sustainability targets to be ambitious, to address borrowers’ core business activities and for compliance to be verified by outside reviewers.

In several countries where SLLs have surged in popularity, regulators and investors have spoken out about loans they said were being misused.

In June 2023, the U.K.’s Financial Conduct Authority released a blunt open letter highlighting its “market integrity concerns” about SLLs, including “weak incentives, potential conflicts of interest, and suggestions of low ambition” in sustainability targets.

“We also noted a general sentiment among banks that the ‘relationship’ may matter more than the borrower’s sustainability credentials,” the agency added.

At the start of last year, a shareholder activist group in Canada filed a complaint calling on banking regulators to investigate whether the country’s five biggest banks had misled investors about their sustainable finance activities. The complaint cited SLLs to oil and mining companies that it said would actually lead to increased carbon emissions.

In May, the investment manager for the United Methodist Church — which had invested with Barclays — blasted the bank for financing “totally dishonest” SLLs to fossil fuel companies, The Bureau of Investigative Journalism reported.

In an email, Barclays said that the Bureau story overestimated how much money in sustainable finance it provided to fossil fuel companies, and that as of last February, it no longer funds energy companies for new oil and gas fields.

The Canadian Bankers Association said in a statement that its members help clients pursue sustainable finance and that each bank is responsible for defining its own eligibility criteria.

Independent research suggests that greenwashing in SLLs is widespread.

A 2023 study of more than a thousand SLLs showed that, on average, companies’ environmental ratings from outside reviewers went down in the years after they obtained the loans. That was especially true for companies that didn’t disclose their sustainability targets and benchmarks, the study found.

This pattern is “a pretty strong indication that there must be some greenwashing going on,” said Sehoon Kim, a finance professor at the University of Florida who conducted the research.

A July 2024 report by Moody’s Ratings, one of the biggest credit rating agencies, also found SLLs to be less effective in boosting sustainability than other types of loans. Moody’s found that only 42% of SLLs that it had rated received high sustainability quality scores. In contrast, 88% of loans used directly for green projects scored highly.

For the first time since their inception, global volumes of SLLs declined significantly in 2023, slumping to $457 billion from $561 billion in 2022. The downturn came as the market faced a backlash against environmentally conscious investing as well as the growing concerns about greenwashing.

In the last year, prominent companies including Mercedes-Benz and steel giant ArcelorMittal have dropped sustainability provisions from their loans, Bloomberg reported in December. In recent months, leading American banks including JPMorgan, Citibank and Wells Fargo have withdrawn from a global alliance of lenders that had agreed to pursue net-zero carbon emissions.

Virmani, of the lending industry association, said skepticism about SLLs and the complicated political attitude toward sustainability means even well-intentioned companies are now thinking twice about these loans out of concern they will be accused of greenwashing.

“There has been a pullback in companies’ desire to do these loans because of that fear,” she said.

Experts say the consequences of greenwashing in SLLs are worse than allowing big corporations to tout potentially bogus makeovers. Flawed SLLs can also take the place of funding intended for truly sustainable companies while giving banks cover to keep investing in the world’s most harmful industries.

“There are choices being made here to continue to do business as usual and add a green veneer to it,” said Brooks, of the environmental group Stand.Earth.

In November 2020, Enbridge won permission from Minnesota to replace an aging pipeline carrying Canadian oil through the state, doubling its capacity at the time. Called Line 3, the pipeline would carry tar sands oil from Alberta. The oil is a heavy, high-sulfur product that is among the most carbon-intensive types of crude oil in the world, according to the Carnegie Endowment for International Peace’s Oil-Climate Index.

A few months later, Enbridge announced a $694 million SLL that it described as linked to environmental, social and governance goals, known as ESG, with no further details provided. At the time, the company’s overall public ESG objectives included reducing its emissions intensity — the same metric used by Drax — 35% by 2030 and increasing diversity in its board and workforce.

The loan was funded by a group of more than 20 banks including Royal Bank of Canada, Barclays, JPMorgan and Citibank.

As the pipeline advanced, Indigenous-led protesters denouncing the project’s impact on the climate and local water sources fought back, some chaining themselves in its path to block construction. In the following months, police and private security guards arrested hundreds of pipeline protesters — including 186 on one day in June alone.

In October 2021, Enbridge completed construction and reopened the Line 3 pipeline.

Now, with double the capacity, the emissions would triple to 273 million tons of carbon dioxide each year, according to a state environmental review in Minnesota. The total added emissions were equivalent to building 50 new coal-fired power plants, a Macalester College physicist calculated.

Environmentalists say that the expansion opened the door to a surge in the production of tar sands, posing an even bigger threat to the climate.

“That increased capacity has enabled new projects to go ahead,” said Keith Stewart, a senior energy strategist with Greenpeace Canada.

Yet Enbridge still announced in 2023 that it had already met one of its key climate objectives, slashing its emissions intensity by 37% in the last five years.

Enbridge’s accomplishment rests on its definitions. Not only does the target cover emissions intensity rather than actual emissions, but it includes only emissions from the company’s direct operations like its pipelines and not from burning the oil and gas that these pipelines bring to market. These direct operations make up less than 2% of total emissions from producing and burning tar sands oil, according to a company brochure, while combustion accounts for about 70%.

Enbridge’s indirect emissions, primarily from the use of its fuels, increased to nearly 55 million tons in 2023 from about 50 million tons when it received its loan two years earlier, according to its annual Sustainability Report.

The company said in written responses that it is committed to fighting climate change and that it has made “good progress” toward this goal by decreasing its absolute emissions from its direct operations by 20% since 2018. That year was marked by exceptionally high emissions and gives a rosy view of its progress despite its more recent increases in its much larger category of emissions. Enbridge said it chose 2018 as its benchmark because it was the first year its emissions data was complete after a previous merger.

“We are transparent in our reporting and disclose all emissions data annually in our Sustainability Reports — emissions intensity and actual emissions,” the company said in an email. “Both are on a downward trajectory.”

Enbridge, which reported 2023 revenues of $32 billion, said replacing the Line 3 pipeline was actually better for the environment than if it had not been rebuilt.

“If Line 3 did not exist, the products it carries would be transported by more carbon intense transportation modes,” the company said.

The Royal Bank of Canada and Barclays said in statements that their approaches to sustainable finance are consistent with industry standards, and that they do not comment on individual clients or transactions. Citibank and JPMorgan declined to comment.

Oil giant Shell obtained a $10 billion SLL — also linked to reductions in emissions intensity — in 2019. But over the next few years, during the term of the loan, it walked back several of its critical climate goals.

In 2023, it scrapped a plan to cut back its oil output in favor of cleaner energy sources. And last year, it abandoned a 2035 target for reducing emissions intensity, citing “uncertainty in the pace of change in the energy transition.”

Shell said it has met its short-term goals for reducing emissions intensity and also has targets for reducing emissions from its operations.

“Shell is committed to becoming a net-zero emissions energy business by 2050,” the company said in an email.

‘Zero deforestation’ claims questioned

Royal Golden Eagle, an Indonesian forestry conglomerate with more than $35 billion in assets, committed to a “zero deforestation” policy in 2015, and in recent years, the group has sought to remake itself as a leader in sustainability.

It has cited SLLs as one of the main elements of this identity. Since 2021, the group has secured more than $3.25 billion in SLLs, according to company documents. The loans were financed by numerous banks including Mitsubishi UFJ Financial Group, which served as sustainability adviser for two of the loans.

“This is just the beginning,” Royal Golden Eagle President Tey Wei Lin said in an article by the group in 2022 celebrating its environmental commitments. “We will be moving a significant majority of our financing towards SLLs.”

The loans to its palm oil subsidiaries Asian Agri and Apical were linked to commitments to “no deforestation,” backed by full supply-chain traceability, by the end of 2025.

But two recent reports by the environmental group Rainforest Action Network have raised questions about how dedicated the companies are to the goal.

An August 2024 analysis of satellite data by the environmental group found that deforestation continued on properties belonging to Asian Agri and suppliers of Apical after the companies received their SLLs, and even increased in 2023. In November, the group found that Apical was among several palm oil traders sourcing palm oil fruits from illegal plantations within a nature reserve in Sumatra known as the “Orangutan Capital of the World.”

Royal Golden Eagle disputed that it is responsible for recent deforestation but declined to provide The Examination with official maps or files supporting its claims, saying it would violate Indonesian law to share them. It said it acted promptly after the November report of illegally sourced palm oil fruit, and cut off the company named in the report as a supplier.

“Royal Golden Eagle firmly refutes the allegations made by the Rainforest Action Network on its agribusiness and reaffirms its strong commitment to sustainability and transparency,” a company spokesperson said in an email.

Mitsubishi UFJ Financial Group did not respond to repeated telephone and email inquiries.

Alex Helan, a senior researcher for the Rainforest Action Network, said its findings revealed “critical flaws” in the SLL market.

“There’s a baked-in incentive for the borrowers and the issuers to mutually benefit their sustainability claims without delivering any meaningful impact,” Helan said.

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To view a searchable database of the sustainability-linked loans in this analysis and a detailed methodology, click here.

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Loans provided in foreign currencies are stated in U.S. dollar values as of January 2025 exchange rates.

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Alex Rozier of Mississippi Today, and Marco Chown Oved and Robert Cribb of the Toronto Star contributed reporting.

Data analysis by Mago Torres, Fernanda Aguirre, and Rachel Auslander of The Examination. Alex Rozier of Mississippi Today and Kuek Ser Kuang Keng of the Pulitzer Center also contributed.

The investigative data consultancy Data Desk provided access and analysis for data from the London Stock Exchange Group.

Visual editing by Taylor Turner and Daniel Nass of The Examination. Illustrations by Alejandra Saavedra Lopez.

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(Reuters) – Futures tracking Wall Street’s main indexes were muted on Wednesday as investors awaited a slew of big bank earnings and a crucial inflation report that could influence market direction, especially for U.S. stocks currently sitting on ripe valuations.

At 04:27 a.m. ET, Dow E-minis were up 35 points, or 0.08%, S&P 500 E-minis were up 3 points, or 0.05% and Nasdaq 100 E-minis were up 23.75 points, or 0.11%.

JPMorgan Chase & Co, Wells Fargo, Citigroup and Goldman Sachs edged up in light premarket trading, ahead of their quarterly earnings reports, due before markets open. Analysts expect the lenders to report stronger earnings, fueled by robust dealmaking and trading.

The S&P 500 Banks Index has gained about 3% in January, outperforming Wall Street’s main indexes, which have logged declines so far this month. In 2024, the banking index logged its biggest annual jump since 2019, on expectations that incoming U.S. President Donald Trump’s policies such as tax cuts and loose regulations could boost the financial sector.

Following a more than two-year bull rally, the S&P 500 is trading at valuations well above its historical long-term average and a disappointing earnings season could put further gains for equities in jeopardy.

Also on the radar is the consumer price index, due at 8:30 a.m. ET, and economists polled by Reuters expect the figure to rise 2.9% in December, from the previous month’s 2.7% advance. Excluding volatile items such as food and energy, the index is expected to increase 3.3%.

“Vital is an understatement to characterise the relevance of today’s CPI release in the U.S., and after Friday’s stellar employment report, the bond market in particular is on tenterhooks for what could be another tumultuous session and days ahead if the data comes in hot,” Societe Generale strategist Kenneth Broux said in a note.

Signs of strong economic activity and expectations that Trump’s policies on immigration and tariffs could further stoke price pressures have caused markets to pare back bets on the U.S. Federal Reserve’s pace of monetary policy easing this year.

Traders see the central bank delivering a total of 31.2 basis points worth of rate cuts this year, according to data compiled by LSEG. The central bank is expected to unveil its beige book on economic activity at 2:00 p.m. ET, which is expected to throw further light on the health of the economy.

Adding to investor unease, yields on longer-dated Treasury bonds remained near their more than one-year highs. [US/]

Remarks from New York Fed President John Williams and Chicago Fed President Austan Goolsbee, both Federal Open Market Committee voting members, will also be parsed later in the day.

Among stocks, Applied Digital lost 4.7% after the data center operator posted a loss for the second quarter.

(Reporting by Johann M Cherian and Medha Singh in Bengaluru; Editing by Pooja Desai)

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By Andrea Shalal

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen on Wednesday will defend the Biden administration’s response to the COVID pandemic, arguing that its stimulus spending and other policies led to robust growth and averted millions of job losses.

In her last major speech before leaving office on Tuesday, Yellen will argue that the Biden administration’s stimulus checks, monthly child tax credits and enhanced unemployment benefits reduced major downside risks, and that inflation – which spiked everywhere – fell earlier in the U.S. than in other rich countries.

While the U.S. economy had done “remarkably well” in the aftermath of the pandemic, it outperformed other advanced economies and did better than in past recessions, Yellen said in excerpts released by the Treasury Department. The pace of inflation cooled dramatically as supply disruptions eased.

The Biden administration and Democrats in Congress enacted the $1.9 trillion American Rescue Plan Act in March 2021, after more than $3 trillion in COVID spending approved during President-elect Donald Trump’s first administration in 2020.

The actions kept paychecks flowing for idled workers, paid rent and put thousands of dollars directly into Americans’ bank accounts, fueling sharp increases in consumer spending at a time when the economy was plagued by pandemic-driven shortages.

Yellen, who last week offered a rare concession that the stimulus spending may have contributed “a little bit” to inflation, argued on Wednesday that it substantially offset the income gaps faced by some 10 million people who lost their jobs or left the labor force by the end of 2020.

The spending averted “significant hardship” and supported demand, which allowed Americans to get back to work quickly, which in turn helped the U.S. avoid the erosion of skills and fallout of long-term unemployment, she said.

A policy aimed solely at preventing the post-pandemic surge in prices without looking at employment consequences would have resulted in far less or even contractionary spending, Yellen said.

Lower spending would likely have led to far lower output and employment, with potentially millions more people out of work, households without the income to meet their financial obligations, and lackluster consumer spending, she said.

Yellen said most researchers agreed a substantial increase in the unemployment rate would have been needed to keep inflation at the Federal Reserve’s 2% target, possibly as high as 10% to 14% throughout 2021 and 2022, with an additional 9 million to 15 million people out of work.

The U.S. unemployment rate has been below 4% for more than two years, an unparalleled streak not seen since the 1960s. The unemployment rate since 1948 has averaged 5.7%.

Yellen said the U.S. economy was doing well now, with solid growth, low inflation and a strong labor market, but more work was needed to address structural trends that make it difficult for many families to achieve a middle-class life.

The former Federal Reserve chair has championed what she calls “modern supply-side economics,” which rejects the idea that deregulation and tax cuts for the rich will fuel broader economic growth, and focuses instead on investments in infrastructure, the labor force and research and development.

(Reporting by Andrea Shalal; Editing by Leslie Adler)

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